The Danish conglomerate has been affected by fallen oil prices and low Asia-Europe freight rates.
A.P. Moller-Maersk, the conglomerate whose major divisions include the container-shipping company Maersk Line, APM Terminals, Damco, oil drilling and production, and miscellaneous other companies reported a second quarter profit of $1.086 billion.
In the same time period last year, Maersk had a profit of $2.304 billion when earnings received a one-time boost from the sale of Maersk’s 18.4 percent interest in Danske Bank. (The company actually had a loss of $475 million from continuing operations in the second quarter of last year. The proceeds from the Danske Bank sale were distributed to shareholders.)
Revenue was $10.53 billion in the second quarter this year compared with $11.95 billion in the same period last year, with the company being affected by both low oil prices and the dramatic drop in container freight rates from Asia to Europe.
Still, Nils Andersen, chief executive officer of A.P. Moller Maersk said the company’s expectation of profits of about $4 billion this year is unchanged.
He said the company’s strategic plan to optimize its business is largely complete, having last year sold its stake in Danske Bank, and last month its stake in Esvagt, a company that provides safety and support services to the offshore oil industry.
“The turbulence in the oil price has had a negative influence in the oil and offshore markets and countries dependent on oil. This has changed the outlook for Maersk Oil, Maersk Drilling, APM Terminals and APM Shipping Services, where previously announced profit and growth targets will be replaced by plans adapting to the volatile environment.”
He said the company’s balance sheet remains strong and that Maersk plans to buy back $1 billion of its stock.
Maersk. Maersk Line continues to expect to have a higher profit in 2014 this year, even though the company forecasts demand for global transportation will only be 2-4 percent, down from earlier forecasts of 3-5 percent.
The world’s largest container carrier will grow “at least with the market to defend its market leading position,” but the company said its growth will be funded by its own cash flow.
Maersk Line had net operating profit of $507 million in the second quarter, compared with $547 million in the second quarter of last year. Revenue in the quarter was $6.26 billion, 9.2 percent less than the $6.9 million reported in the same period last year.
The company said freight rates declined 14 percent, “largely attributable to bunker cost savings being passed on. Rates declined especially on the Asia–Europe trade due to capacity injections from all alliances and volume decline.”
Maersk said it moved nearly 5 million TEUs in the second quarter, 3.7 percent more than in the same 2014 period.
Maersk Line said its unit cost per 40 foot container is now $2,246—that’s down from an average of $3,054 in 2012 and reflects both lower fuel costs and the economies of scale that the company is achieving through the use of large ships. The company’s bunker consumption per 40-foot container has fallen from 1.797 tons per 40-foot container to 0.902 ton in the second quarter.
The company said “our business model assumes deflationary rate development and thus our focus is on cost leadership.”
APM Terminals. APM Terminals had net operating profit after tax of $161 million in the second quarter, compared with $223 million in the same 2014 period.
Revenue at APMT was $1.03 billion in the second quarter this year, compared with the same 2014 last year.
Throughput declined to 9.2 million TEUs in the second quarter, 6 percent less than in the same 2014 period due to divestments and less import volumes in West Africa and Russia.
APM Terminals said it will invest $800 million to build a new container terminal and upgrade its terminal in Tema, Ghana. The facility will have a 3.5 million TEUs throughput capacity.
Damco. Maersk said at its forwarding arm, Damco, “restructuring efforts have improved productivity and reduced overhead cost.”
Damco moved into the black, making a $7 million profit in the second quarter, compared to a $32 million loss in the second quarter of 2014.
